Understanding the Needs of Users of Public Sector Financial Reports: How Far Have We come?

The approach taken to the development of the accounting Conceptual Framework in Australia has been “sector neutrality”, that is no distinction has been drawn between the public sector and the private sector for financial reporting purposes. The prevailing view has been that a transaction is a transaction, regardless of the sector in which it has occurred, and implicitly that the needs of users do not differ between the public sector and the private sector. This essay provides an outline of the literature in relation to the development of “decision-useful” accounting and the subsequent empirical research on the needs of users of private sector and public sector financial reports. The development of conceptual frameworks and other professional pronouncements, including the recent International Public Accounting Standards Board (2008) Consultation Paper are reviewed. The findings of a survey by Clark (2001) in respect of users public sector annual reports in Victoria, Australia are contrasted with the findings of a later survey of the needs of users of public sector financial reports conducted in Cyprus (Krambia-Kapardis & Clark 2010). The survey of users of Victorian public sector annual reports indicated that the purposes for using annual reports were not adequately reflected in the purposes identified in the Statement of Accounting Concept 2 (AARF, 1990). In contrast, the findings of the survey of users of public sector financial reports in Cyprus suggest that the identified purposes for use, according to the IPSASB Consultation Paper, reasonably describe the information needs of users.